The case against former International Monetary Fund chief Dominique Strauss-Kahn, who was charged with sexually assaulting a hotel housekeeper, is near collapse, the New York Times reported on Thursday.
It said Strauss-Kahn, 62, who had been a leading candidate for the French presidency when he was arrested on May 14, may be released on his own recognizance as soon as Friday.
Strauss-Kahn's defense attorney, Benjamin Brafman, said earlier on Thursday that their client would go back to court in New York on Friday at 11:30am (1530 GMT) before Judge Michael Obus to seek changes to his bail conditions.
The Times said prosecutors had met with Strauss-Kahn's lawyers on Thursday and the parties were discussing whether to dismiss the felony charges.
"Indeed, Mr. Strauss-Kahn could be released on his own recognizance, and freed from house arrest, reflecting the likelihood that the serious criminal charges against him will not be sustained," the paper said.
"The district attorney's office may try to require Mr. Strauss-Kahn to plead guilty to a misdemeanor, but his lawyers are likely to contest such a move."
The paper quoted what it said were two well-placed law enforcement officials as saying that although forensic evidence showed there had been a sexual encounter between the French politician and the maid, the accuser had repeatedly lied and prosecutors did not believe much about what she had told them.
Strauss-Kahn resigned from the IMF on May 19 and pleaded not guilty on June 6, vehemently denying the allegations. He faced up to 25 years in prison if convicted.
The paper said that prosecutors had discovered issues involving the asylum application of the 32-year-old housekeeper, who is Guinean, and possible links to criminal activities, including drug dealing and money laundering.
It said prosecutors' investigators had discovered that the woman had had a phone conversation with an incarcerated man within a day of her encounter with Strauss-Kahn in which she discussed the possible benefits of pursuing the charges against him. The conversation was recorded.
It added that the man, who had been arrested on charges of possessing 400 pounds (180 kg) of marijuana, was among a number of individuals who had made multiple cash deposits, totaling around $100,000, into the woman's bank account over the last two years.
Strauss-Khan was released on $1 million cash bail and a $5 million bond, and is under house arrest in a townhouse in the Tribeca neighborhood of Manhattan, where he is equipped with an electronic monitoring device and under the 24-hour watch of armed guards. The arrangements are costing Strauss-Kahn $250,000 a month.